In its 798-year history, Liverpool has never seen so much money. The Duke of Westminster, no less, is spending the best part of a billion quid rebuilding the city centre. Other developers are queueing down the Mersey to build luxury apartments and hotels (including, inevitably, a chic new Beatles Hotel near what purports to be the Cavern).

Another £95 million is being spent by the Liverpool Culture Company, the quango set up to mastermind the run-up to 2008, when Liverpool becomes European Capital of Culture. Its aim, according to the chief operating officer, Jason Harborow, is to “reposition Liverpool in relation to what we call our creative community” — and, by 2008, to generate three million more tourists each year for the city.

Grand words, grand ambitions — and a hell of a lot of dosh. But what does the “creative community” itself think about that? As everybody knows, Liverpool has produced more No 1 hit singles (53) per head of population (480,000) than any other city in the world. From the Beatles to Atomic Kitten, each and every one is now immortalised on a wall in Mathew Street.

But as not so many people know, the current music scene on Merseyside is every bit as vibrant as in the Sixties. From the Zutons and the Coral — and their Liverpool-based record company, Deltasonic — to the pub-rock bands packing the city’s clubs, this is a metropolis that seems to ooze music from every doorway, and to mount music festivals practically every weekend.

And from hip-hop and punk to heavy metal, it’s an astonishingly diverse scene. This month Liverpool enjoyed its first Blues and Roots Festival. Tomorrow its buzzing “Celtic rock” pool of talent will get a regular showcase for the first time, with the inauguration of folk-rock nights at the atmospheric Slaughterhouse, in the city centre.

Then in mid-November comes Liverpool Music Week — an extraordinary free event organised by a bunch of local promoters, none of whom looks older than about 17. It will present no fewer than 150 bands in seven venues across the city. “This is our third year, and the ball is really rolling,” says its exuberant mastermind, Mike Deane.

According to Phil Hayes, the founder of Liverpool’s Picket Club, this overriding need to make music is in the blood of Liverpudlians. “It’s related to our Celtic roots. Then there’s the family thing. The kids of people like Mike McCartney (brother of Paul and himself a pop star with the Scaffold) are themselves now playing in local bands. It’s a bit like the aristocracy, only more fun.”

Tony Butler agrees. His club, the legendary Zanzibar, packs in hundreds of punters a night to listen to the best local talent. “There must be 300 bands in Liverpool right now,” he says. “And yet it’s a real community, not a competition. Very different from London. This city is a cauldron of talent.”

This talent is the goose that laid the golden egg: the winning of the Capital of Culture accolade. The trouble is that, in some quarters, the cauldron is now simmering with resentment at how the “suits” have moved in.

“There’s a feeling now of things being dictated from on high, rather than coming from the roots,” says an outspoken veteran of the Liverpool music scene, Pete Wylie of the Mighty Wah.

“It’s as if the people running 2008 have no confidence in what’s already here. There are lots of government agendas being worked out. People are getting grants because they are good at filling in forms. But money isn’t coming into the music scene: it’s going to consultants. The clubs that really fuel the music are unfunded and almost off the radar as far as the official bodies are concerned.”

One such place is now literally off the radar. With a warped sense of timing, Hayes’s 20-year-old Picket Club — a seminal venue for acts such as the La’s and the Coral — was shut down just months after the Capital of Culture announcement, when its landlord decided to sell to a developer. For the sceptics who think that the 2008 jamboree is merely a goldrush for property speculators — more the “culture of capital” than the “capital of culture”, as Mersey wags put it — the episode seemed distressingly symbolic. Reminiscent, in fact, of the infamous day when the city allowed the orginal Cavern to be bulldozed.

Hayes himself is concerned that the Culture Company’s 60-odd bureaucrats are intent on presenting Liverpool as a once-bad place that has now scrubbed up nicely. “Don’t take the edge off Liverpool!” he exclaims. “That’s the whole point about the place.”

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